Third quarter 2011 results Third quarter 2011 results Jan - - PowerPoint PPT Presentation

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Third quarter 2011 results Third quarter 2011 results

Jan Nooitgedagt

CFO Media resentation

The Hague, November 10, 2011

Media presentation

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Withstanding market turmoil with continued capital strength and resilient franchise ƒ Capital position remains strong ƒ Lower underlying earnings due to market impact, currencies and longevity y g g g y ƒ Interest rate assumptions updated, reflecting current environment Restr t ing f the b iness track targeting l

• st base

ƒ Restructuring of the business on track, targeting lower cost base ƒ Record net deposits, driven by pensions and asset management

2

( g

Focus on delivering on targets

Achieve return on equity of Grow underlying earnings before tax by Double fee-based earnings to Increase annual

• perational free cash flow to

10-12%

by 2015

7-10%

• n average per annum

30-35% €1.3-1.6 billion

y g p between 2010 and 2015

• f underlying earnings by 2015

by 2015

29%

Fee-based earnings

€944 million*

Operational free cash flow Underlying earnings before tax

• 15%

Return on equity

7.4%

(8.7% excluding

• f underlying earnings YTD 2011

YTD 2011

million*

YTD 2011 run-off capital) YTD 2011

* Excluding market impact of EUR 1,075 million in Q3 2011 Main economic assumptions embedded in targets: annual gross equity market return of 9%, 10 year US interest rate of 5.25% in 2015 and EUR/USD rate of 1.35 3

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Underlying earnings impacted by adverse markets and assumptions update

ƒ Market impact on underlying earnings in line with sensitivities given in Q2 2011 ƒ Assumption changes include the positive impact of updated mortality in US Life & Protection

• ffset by charges related to policyholder behaviour in US variable annuities
• ffset by charges related to policyholder behaviour in US variable annuities

ƒ Lower result in CEE mainly related to higher claims in non-life due to seasonality, lower balances of de-emphasized US fixed annuities and lower margins in the Dutch life portfolio Underlying earnings before tax

(EUR million)

401 (33) 35 (14) (7) (6) (15) 361

Underlying Market impact Assumption CEE US fixed The Other Underlying

4

y g earnings Q2 2011 p p changes annuities Netherlands y g earnings Q3 2011

The Netherlands New Markets United Americas

Year on year earnings impacted by adverse markets and charges in NL and UK

ƒ Compared to Q3 2010, Americas’ earnings decreased due to lower fixed annuities spreads and balances as the product is de-emphasized, partly offset by higher fee-based earnings ƒ In the Netherlands earnings were imp pacted by y lower investment income in Life & Saving gs and higher provisioning for longevity in Pensions ƒ UK earnings decreased due to lower fee income and higher anticipated exceptional charges ƒ New markets were lower driven by Central & Eastern Europe and Variable Annuities Europe New markets were lower driven by Central & Eastern Europe and Variable Annuities Europe

The Netherlands New Markets United Kingdom Americas

Underlying earnings before tax

(EUR million) (EUR million)

Kingdom

(GBP million) (USD million)

458 469 437 97 74 68 24 9 8 55 59 43

Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11

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Net income affected by fair value items

ƒ Fair value items impacted by interest rate assumption changes (EUR168m), in addition to lower interest rate and equity markets, increased volatility and spread widening (EUR120m) ƒ Impairments were mainly linked to US residential mortgage-backed securities, financial holdings f P t d G k b k d t l i l ti i H

• f Portuguese and Greek banks and new mortgage legislation in Hungary

ƒ Other charges mainly related to restructuring charges in the Netherlands and UK ƒ Tax benefits related to utilization of losses for which no deferred tax asset was recognized in the US d t t d ti i th UK US and a tax rate reduction in the UK

361 (288) 102 (132) (5) (54) 76 60

Underlying earnings to net income development in Q3 2011

(EUR million)

361 (288) 102 (132) (5) (54) 76 60

Underlying earnings before tax Q3 11 Fair value items Realized gains

• n investments

Impairment charges Run-off businesses Other charges Income tax Net income Q3 11 tax Q3 11

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Update of assumptions

ƒ In the US, annual review of all assumptions relative to current experience and management expectations typically performed in third quarter:

►

Assumption changes related to market movements reflected in fair value items g

►

Other assumption changes reflected in underlying earnings

ƒ Update of interest rate assumptions reflecting current market circumstances ƒ Limited impact from policyholder behaviour and expense-level updates ƒ Limited impact from policyholder behaviour and expense level updates

Assumption change Line Result impact in USD million Assumption change Line Result impact in USD million Long term interest, fixed income fund return, money market rates Fair value items (237) Mortality Life & Protection 65 Mortality Life & Protection 65 Policyholder behaviour Variable Annuities (12) Expenses Fixed Annuities (4) Total (188) Total (188)

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Update of interest rate assumptions to reflect current environment

6.0%

ƒ 10-year US Treasury assumption lowered to 4.75% from 5.25%

►

Grading from current yield to 4.75% in five years

Assumed 10-year US Treasury rate

(Percentage)

4.0% 5.0%

g y y

ƒ Five year average rate lowered by 90 bps

►

Old assumption 4.3%

►

New assumption 3 4% in line with 10-year

2 0% 3.0% Old assumption New assumption

►

New assumption 3.4% in line with 10 year forward rate

ƒ Bond fund return lowered to 4% from 6% for coming 5 years and 6% thereafter

1.0% 2.0%

g y ƒ Money market rates flat at 0.2% for coming two years followed by a 3-year grading to 3% ƒ No change to long term credit spread (graded

0.0% 2011 2012 2013 2014 2015 2016

No change to long term credit spread (graded

• ver two years) or default assumptions

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Cost reduction programs in established markets delivering results

ƒ Cost savings in Americas and UK in line with strategic focus ƒ Development of new propositions to be better positioned to respond to changing conditions and

• pportunities in the market in the UK and the Netherlands

ƒ Restructuring charges in Q3 related to the Netherlands (EUR 60 million) and UK (EUR 15 million) ƒ Expense level of growth businesses higher while improving efficiencies

2,488 (86) (64) 31 2,368 79 25 19 78 2,570

Operating expenses

(EUR million)

YTD Q3 2010 Currency effects Cost savings established Development new Operating expenses excl Restructuring charges NL Restructuring charges UK Restructuring charges other Other* YTD Q3 2011 established markets new propositions expenses excl. restructuring and other charges NL charges UK charges other countries * Other includes exceptional expenses related to the divestment of Transamerica Reinsurance of EUR 32 million 9

UK on track to deliver GBP 80 million cost savings by year-end 2011

Enacted costs savings

ƒ Targeted savings almost achieved

UK Life and Pension

(GBP million)

ƒ Operating expenses Q3 of GBP 104 million include: Operating expenses Q3 of GBP 104 million include:

100

►

Restructuring charge of GBP 13 million

GBP 71 million

►

Development of new propositions of GBP 3 million

►

Customer redress program exp penses of GBP 7 million

75

p g

13 21

ƒ Complete the majority of customer redress program

50

and restructuring program by y end 2011 g g

4

►

Charge GBP 5 million in Q3

25

►

Exceptional expenses and charges may continue

33

until end 2011

2010 Q1 11 Q2 11 Q3 11 Q4 11E Targeted savings

On track to deliver 25% cost reduction

* Exceptional costs include restructuring costs, customer redress program costs, proposition development and regulatory developments 80 10

p g p g

Reducing costs in Dutch insurance and banking businesses

ƒ Cost reduction of EUR 100 million from 2010 level ƒ Majority of savings to be achieved in 2012 ƒ Restructuring charge of EUR 60 million in Q3 2011

Operating expenses

(EUR million) 250

ƒ Restructuring charge of EUR 60 million in Q3 2011 ƒ Initiatives enacted:

►

Closing AEGON Bank’s office in Nieuwegein

100 498

►

Reduced project portfolio and external staffing

►

Transferred systems to European Data Center

ƒ Further reduction through:

2010 2013

►

Reduction of 300 FTE, mainly support functions

►

Reduce external staffing and sourcing

►

IT cost cutting ƒ

Life & Savings Pensions Non life

►

Lean thinking and process efficiencies

ƒ Acceleration of cost reduction program and repositioning for the future

ƒ

Life & Savings, Pensions, Non-life

ƒ

Distribution and other

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New life sales Gross Sales zyxwvutsrqponmlkihgfedcbaVUTSRQPONMIHFEDCB

Total sales up 2% driven by strong pension deposits

ƒ Sales up driven by record deposits from pensions and variable annuities in the US and asset management inflows, partially offset by lower pension deposits in the CEE ƒ New life sales declined as higher production in Spain and CEE was more than offset by lower

• l

i the US and the UK follo ing pricing f rod ts contin ed foc margin volumes in the US and the UK following re-pricing of products; continued focus on margin instead of volumes ƒ Increased accident & health sales primarily the result of growth in the employer benefits and affinity marketing businesses affinity marketing businesses ƒ VNB of EUR 58 million, down on lower spreads on mortgages, hedging costs in the US and lower sales in the UK

New life sales Accident & health Gross deposits Sales*

(EUR million)

and general insurance

(EUR billion) (EUR billion)

Accident & health

(EUR million)

deposits

1.6 1.3 1.6 494 431 405 9.4 6.7 10.5 160 159 165

Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11

* Sales consists of new life sales, new premiums accident & health and general insurance and 1/10 of gross deposits 12

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Growth in US fee-based business offset by lower equity markets

ƒ Employer Solutions & Pensions balances continue to increase

►

Innovation and customer service is the cornerstone of the pension growth strategy reflected by continued strong pension deposits due to higher takeover assets combined with low withdrawal rates of 10.6%

►

St bl V l S l ti b l d USD 60 billi b l d b i i d hi l Stable Value Solutions balances amounted to USD 60 billion, balances are expected to be maintained at this level l

►

Earnings remain level as Q3 2010 included a reserve release of USD 13 million

ƒ Successful VA sales of Retirement Income Max drive net deposits

Variable annuity earnings include a charge for updated policyholder behaviour of USD 12 million

►

Variable annuity earnings include a charge for updated policyholder behaviour of USD 12 million

ƒ Retail mutual fund platform well-positioned for further growth

Underlying earnings Balances Net deposits

(USD billion) (USD million)

111 176 141 191 199 183

(USD billion)

p

4.8 1.5 1.5

Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 ƒ Employer Solutions & Pensions ƒ Retail mutual funds ƒ Variable annuities

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Measures to protect balance sheet proved successful

ƒ Capital position shielded from effects of lower interest rates and equity markets

►

In Q3 2011 guarantees at fair value increased to EUR 5.6 billion from EUR 2.1 billion in Q2 2011

►

Hedging programs performed well offsetting higher reserve requirements on related guarantees

Continued need for solid capital buffers

►

Capital requirement increased considerably

►

Capital markets remain volatile

►

De-risked investment portfolio

►

Product re-design

ƒ Continued need for solid capital buffers g g g p p p p

►

Lowered spread-based balances

►

Increased equity and interest rate hedging De risked in estment portfolio

►

Hedging programs performed well offsetting higher reserve requirements on related guarantees

►

Effect on earnings limited as a result of successful hedging

ƒ De-risking and hedging actions to protect capital position implemented

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Limited exposure in general account to peripheral European countries

T t l i h l E i 8% f l ƒ Total exposure to peripheral European sovereigns 0.8% of general account ƒ Exposure to Spain increased following the proportional inclusion of Caixa Sabadell Vida assets ƒ Corporate debt mainly related to defensive sectors, for example utilities General account assets

(at fair value September 30, 2011 )

Peripheral European countries

(EUR million, at fair value September 30, 2011)

Sovereign Bank RMBS Corporate Total

Greece 2 9

• 26

37 13% 18% 11%

EUR

Ireland 26 11 251 307 595 Italy 65 210 55 693 1,023 Portugal 9 25 54 80 168 22% 33%

EUR 143 billion

Spain 985 416 873 788 3,062 ƒ

Corporates/banks*

ƒ

Peripheral sovereigns

Total 1,087 671 1,233 1,894 4,885 % GA % 0 8% 0.5% 0 5% 0 9% 1 3% 3 4%

■

Cash/Treasuries/Agencies*

■

Structured assets*

ƒ

Other general account

ƒ

Peripheral banks

GA 0.8% 0.9% 1.3% 3.4%

■

Mortgages

ƒ

Peripheral RMBS ƒ Peripheral corporates

* Excluding exposure to peripheral European countries 15

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Continued strong excess capital position

ƒ Total excess capital of EUR 3.4 billion

►

Excess capital of EUR 2.2 billion in operating units, increase mainly driven by fair value movements in the guarantees in the Netherlands H ldi it l f EUR 1 2 billi b t t d EUR 900 illi

capital Q2 2011 to holding

• perating units

capital Q3 2011

* Holding expenses and interest payments offset by taxes received

ƒ Strong IGD ratio of ~190%

Holding excess capital development Q3 2011

(EUR billion)

1.0 0.3 (0.1) 0.1 1.2

Excess Distributions Investments in Holding and other* Excess

►

Holding excess capital of EUR 1.2 billion, above targeted EUR 900 million

ƒ Positive effect Transamerica Reinsurance sale of EUR 1.1 billion on excess capital offset by negative impact of low interest rates on required capital in the US

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Conclusion

ƒ Capital position remains strong ƒ Lower underlying earnings due to market impact, currencies and longevity y g g g y ƒ Interest rate assumptions updated, reflecting current environment Restr t ing f the b iness track targeting l

• st base

ƒ Restructuring of the business on track, targeting lower cost base ƒ Record net deposits, driven by pensions and asset management

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Q & A

18 18

Appendix

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Operational free cash flows affected by interest rates and equity markets

ƒ Impact lower interest rates and equity markets

►

Earnings on the in-force impacted by EUR 0.1 billion

►

Higher required capital of EUR 1.1 billion in the US

ƒ Investments in new business increased as a result of higher pension and variable annuity deposits

Operational free cash flow development

(EUR million)

EUR million Q1 2011 Q2 2011 Q3 2011

ƒ

Earnings on in-force 523 494 337

ƒ

Return on free surplus 17 20 12

ƒ

Release of required surplus (1) 50 (687)

ƒ

New business strain (275) (281) (340)

ƒ

Operational free cash flow 264 283 (678)

ƒ

Impact markets on required capital (1,075)

ƒ

Operational free cash flow excluding market impact 397

20

Shareholders’ equity up on currencies and effects of lower interest rates

ƒ Revaluation reserves increase to EUR 2.6 billion as a result of lower interest rates partly

• ffset by spread widening

ƒ Capital base ratio of 73.6%, on target to achieve at least 75% of total capital by end 2012 p , g p y ƒ Return on equity 7.4% YTD, or 8.7% excluding run-off ƒ Book value per common share of EUR 9.21

Shareholders’ equity development Q3 2011 (EUR billion)

16.8 0.1 1.5 1.0 19.4

Q2 2011 Sh h ld ' it Net income Change in l ti Change in foreign currency t l ti Q3 2011 Sh h ld ’ it Shareholders' equity revaluation reserves translation reserve Shareholders’ equity

21

The Netherlands United Americas New Markets

New life sales of EUR 405 million

ƒ Americas’ sales were down due to discontinuance of universal life single premium products ƒ The Netherlands level at EUR 32 million, stronger pension sales were offset by lower life sales ƒ Lower annuity sales following repricing and lower pensions sales as a result of lower Lower annuity sales following repricing and lower pensions sales as a result of lower commission levels in the UK ƒ New Markets: higher sales in Spain following the inclusion of Caixa Sabadell Vida and growth in CEE as a result of strong recurring life production after successful refocus from pension to g g life products partly offset by lower sales in Asia New life sales

The Netherlands United Kingdom Americas New Markets

(EUR million)

Kingdom

(GBP million) (USD million) (EUR million)

179 151 32 40 219 191 60 70

Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11

155 64 175 32 22

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Continued strong gross deposits reflect shift to fee business

ƒ Strong retirement and stable value deposits in the US ƒ Strong inflows of third-party asset management as a result of new mandates ƒ Successful launch of the Retirement Income Max rider at the end of Q1 drove strong US ƒ Successful launch of the Retirement Income Max rider at the end of Q1 drove strong US variable annuity deposits

6.0 0.7 1.6 2.2 10.5

Gross deposits Q3 2011

(EUR billions)

Pensions Life Individual savings & Asset management Gross deposits Pensions Life Individual savings & Asset management Gross deposits retirement

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Value of new business of EUR 58 million

ƒ US: higher pension deposits offset by higher hedging cost taken into account for VA. The variable annuities will be repriced to reflect these higher costs ƒ Lower mortgage-related sales and higher mortgages-related funding costs in the Netherlands g g g g g g ƒ Lower new business volume in the UK following repricing of annuities and lower commission levels in group pensions ƒ New markets decreased due to adverse pension legislation in Hungary and margin pressure g g y g in Variable Annuities Europe Value of new business

Americas

(USD million)

New Markets

(EUR million)

United Kingdom

(GBP million)

The Netherlands

(EUR million)

51 73 34 16 10 3 23 20 14 27 20 16

Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11

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Americas

ƒ Underlying earnings before tax amounted to USD 437 million – growth in fee-based businesses was more than offset by lower earnings from de-emphasized fixed annuities ƒ Operating g ex p penses adj justed for exp penses related to the divestment of the life reinsurance activities and employee benefit plans remained level ƒ New life sales declined as a result of discontinuance of single premium universal life products and repricing of certain universal life products to reflect the current interest rate environment ƒ Gross deposits driven by strong retirement (USD 4.6 billion) and stable value deposits (USD 3.7 billion) and the successful launch of variable annuity rider, Retirement Income Max

Underlying earnings before tax (USD million) New life sales

(USD million)

Gross deposits

(USD billion)

Operating expenses

(USD million)

6.1 7.2 10.4 472 502 506 458 469 437 179 151 155

Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11

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The Netherlands

ƒ Underlying earnings decreased to EUR 68 million as a result of higher provisioning for longevity and lower investment income in life ƒ Operating g ex p penses increased to EUR 242 million due to restructuring g char g ge of EUR 60 million and investments in new distribution capabilities ƒ New life sales stable at EUR 32 million as higher pension sales were offset by lower sales

• f mortg g

age-related insurance products ƒ Gross deposits increased as a result of more competitive interest rates on savings accounts

Underlying earnings before tax (EUR million) New life sales

(EUR million)

Gross deposits

(EUR million)

Operating expenses

(EUR million)

97 74 68 179 201 242 525 442 584 32 40 32

Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11

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United Kingdom

ƒ Underlying earnings before tax decreased to GBP 8 million

►

Life earnings lower as lower investment income was only partly offset by cost savings

►

Pensions recorded a loss as a result of charges related to customer redress, exceptional expenses and Pensions recorded a loss as a result of charges related to customer redress, exceptional expenses and lower fee income due to lower equity markets

ƒ Operating expenses increased due to restructuring and development of new propositions

►

GBP 71 million cost savings enacted, , on track to reduce op perating g ex p penses by y 25% by y the end of 2011

ƒ New life sales decreased mainly as a result of repricing annuities and lower commission on group pension products

Underlying earnings before tax (GBP million) New life sales

(GBP million)

Gross deposits

(GBP million)

Operating expenses

(GBP million)

24 9 8 13 14 10 102 109 104 219 191 175

Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11

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New Markets

ƒ Underlying earnings decreased to EUR 43 million as a result of lower earnings in CEE following the transfer of pension assets to the Hungarian State and lower earnings for VA Europe only partly offset by higher performance fees in asset management ƒ Operating expenses slightly decreased as a result of cost savings by asset management and CEE ƒ New life sales growth driven by y stron g g life recurring g premium production in CEE and the inclusion of Caixa Sabadell Vida in Spain ƒ Deposits in asset management driven by new mandate wins and good performance in retail segments

Underlying earnings before tax (EUR million) New life sales

(EUR million)

Gross deposits

(EUR billion)

Operating expenses

(EUR million)

55 59 43 4.2 2.5 134 132 130 60 70 64

Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11 Q3 10 Q2 11 Q3 11

1.2 28

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Release of capital from run-off businesses

ƒ Release of capital following the divestment of life reinsurance activities and lower institutional spread-based balances ƒ Current capital allocated to run-off businesses of EUR 2.1 billion

►

Return on capital of run-off businesses of 1.6% YTD

ƒ Capital intensive run-off businesses negatively impact return on equity

►

Capital allocated to run off businesses is included in RoE calculations but run off earnings are not

►

Capital allocated to run-off businesses is included in RoE calculations, but run-off earnings are not

Allocated capital to run-off businesses Allocated capital to run off businesses

(EUR billion)

Run-off period Q2 2011 Q3 2011 2015E

ƒ

Payout annuities > 20 years 0.2 0.2 0.3

ƒ

Institutional spread-based business ~ 5 years 0.6 0.6 0.1

ƒ

BOLI/COLI > 10 years 0.4 0.4 0.4

ƒ

Life reinsurance ~ 15 years 1.7 0.9 0.7 2.9 2.1 1.6

29

General account investments roll-forward

General account investment roll-forward

EUR billion Americas The Netherlands United Kingdom New Markets Opening balance June 30, 2011 84.0 36.8 8.8 2.8 Net in- and outflow (0.9) 1.1 (0.0) 0.6 Unrealized / realized results 1.9 0.4 0.3 (0.0) ( ) Foreign exchange 6.4 0.0 0.4 (0.0) Closing balance September 30, 2011 91.4 38.3 9.5 3.4

ƒ Outflows in the Americas as a result of divestment of Life Reinsurance, outflows of Institutional spread based balances and fixed annuities as the product is de emphasized Institutional spread-based balances and fixed annuities as the product is de-emphasized

30

Investments general account

AEGON UNAUDITED INVESTMENTS GENERAL ACCOUNT

September 30, 2011

amounts in EUR millions except for the impairment data The United New Holdings amounts in EUR millions, except for the impairment data Americas Netherlands Kingdom Markets g and other TOTAL

Cash / Treasuries / Agencies 18,372 9,399 2,476 1,449 405 32,101 Investment grade corporates 38,813 5,278 4,950 884

• 49,925

High yield (and other) corporates 2,385 46 177 17

• 2,625

Emerging markets debt 1,440 4 55

• 1,499

Commercial MBS 6 330 2 372 4

• 6 708

Commercial MBS 6,330 2 372 4 6,708 Residential MBS 5,201 1,247 491 259

• 7,198

Non-housing related ABS 3,890 944 906 21

• 5,761

Subtotal 76,431 16,920 9,427 2,634 405 105,817 Residential mortgage loans 51 17,205

• 367
• 17,623

Commercial mortgage loans 8,152 69

• 8,221

Total mortgages 8,203 17,274

• 367
• 25,844

g g , , , Convertibles & preferred stock 250 17

• 267

Common equity & bond funds 972 385 48 69 8 1,482 Private equity & hedge funds 1,500 217

• 1,717

Total equity like 2,722 619 48 69 8 3,466 Real estate 1,293 2,020

• 3,313

Other 668 1 500 8 277

• 2 453

Other 668 1,500 8 277 2,453 Investments general account (excluding policy loans) 89,317 38,333 9,483 3,347 413 140,893 Policyholder loans 2,093 13

• 7
• 2,113

Investments general account 91,410 38,346 9,483 3,354 413 143,006 Impairments in basis points (quarterly) 10 1 24 90

• 10

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69

Impairments

ƒ Impairments are linked to US residential mortgage-backed securities, financial holdings of Portuguese and Greek banks in the UK and mortgages in Hungary largely attributable to the effect of new legislation ge y g s a ƒ Impairments included recoveries of EUR 9 million

Impairments Impairments

(EUR million)

416 501 385 394 286 212 150 77 92 133 62 100 132

325 355 330 91 146 101 64 93 69 11 34 56 325 355 284 330 193 143 139 61 85 99 58 53 76 16 7 34 4 47 56

Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

■

Americas

■

Rest of the World

32

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Impairments by asset class

AEGON general account investments

Q3 2011 impairments / (recoveries) by country unit - IFRS basis (pre-DAC, pre-tax)

EUR millions Americas NL UK New Markets Total EUR millions Americas NL UK New Markets Total

ABS – Housing

• ABS – Non-housing

(0)

• (0)

CMBS

• RMBS

64

• 64

RMBS 64 64 Subtotal structured assets 64

• 64

Corporate – private 7

• 7

Corporate – public (0) 21 21 Subtotal corporate 7 21 28 Subtotal corporate 7 21 28 Sovereign debt

• Residential mortgage loans
• 5
• 28

33 Commercial mortgage loans 6

• 6

Subtotal mortgage loans 6 5 28 39 Subtotal mortgage loans 6 5

• 28

39 Commercial paper

• Total credit impairments

77 5 21 28 131 Common equity impairments 4 1

• 5

Total 81 6 21 28 136 33

Credit losses in the US trending down

ƒ Q3 2011 US credit impairments amount to 11 bps

►

Annualized level of 33 bps

US credit losses in bps of fixed income assets

64 82 91 120 52

average of 33 bps

44 44 37 27 9 25 1 2 4 8 17 48 17 2 2 52 33

since 1990

• 6
• 2

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 34 Periods prior to 2005 are based on Dutch Accounting Principles (DAP) Periods 2005 and later are based on International Financial Reporting Standards (IFRS)

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Commercial mortgage loans

ƒ USD 10.9 billion commercial mortgage loan portfolio* ƒ Sound debt service coverage ratio of 1.7 A LTV f 65% ƒ Average LTV of 65% ƒ Own origination

CML net impairments

(USD million)**

Weighted average loan-to-value by property type ***

(%)

70 80

23 27

20 30 40 50 60 70

6 9

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 10 20

Apartment $2.0B Industrial $1.8B Office $3.3B Retail $2.3B Other commercial $1.0B Agricultural $0.5B

* Includes commercial mortgage loans, agriculture loans, and mortgage loan originated bond portfolios ** Included in overall impairments *** IFRS Carrying Values as of September 30, 2011 NOTE: Other commercial includes B notes, Mezz, Participation, and other commercial loans. 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 9/30/2011 35

Reconciliation of effective tax rate Q3 2011

Reconciliation of effective tax rate Q3 2011

EUR million

Americas The Netherlands United Kingdom New Markets/ Holdings Total Income before tax (2) 86 (13) (87) (16) Nominal tax rate 35.00% 1 25.00% (22) 26.50% 3 25.00% 23 5

Actual income tax can deviate from the nominal tax rate amongst others due to:

( ) Actual income tax 72 (23) 13 14 76 Net income 70 63 (0) (73) 60

ƒ Actual income tax can deviate from the nominal tax rate, amongst others due to:

►

Tax exempt income

►

Tax credits

►

Cross border intercompany reinsurance

►

Policyholder tax UK (offsetting)

►

Valuation allowances for tax losses

ƒ Americas actual income tax mainly impacted by:

Tax benefit of EUR 46 million due to utilization of tax losses for which previously no

►

Other items

►

Tax benefit of EUR 46 million due to utilization of tax losses for which previously no deferred tax asset was recognized

►

Tax loss related to cross border reinsurance transaction of EUR 17 million

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gcc com

For questions please contact Group Corporate Communications

+31 70 344 8956 ir@aegon gcc-ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands

WWW.AEGON.COM

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Disclaimer

Cautionary note regarding non-GAAP measures This document includes certain non-GAAP financial measures: underlying earnings before tax and value of new business. The reconciliation of underlying earnings before tax to the most comparable IFRS measure is provided in Note 3 y g g y g g p p "Segment information" of our Condensed consolidated interim financial statements. Value of new business is not based on IFRS, which are used to report AEGON's primary financial statements and should not be viewed as a substitute for IFRS financial measures. We may define and calculate value of new business differently than other companies. Please see AEGON’s Embedded Value Report dated May 12, 2011 for an explanation of how we define and calculate value of new business . AEGON believes that these non-GAAP measures, together with the IFRS information, provide a meaningful measure for the investment community to evaluate AEGON’s business relative to the businesses of

• ur peers.

Local currencies and constant currency exchange rates This document contains certain information about our results and financial condition in USD for the Americas and GBP for the United Kingdom, because those businesses operate and are managed primarily in those currencies. Certain comparative information presented on a constant currency basis eliminates the effects of changes in currency exchange rates. None of this information is a substitute for or superior to financial information about us presented in EUR, comparative information presented on a constant currency basis eliminates the effects of changes in currency exchange rates. None of this information is a substitute for or superior to financial information about us presented in EUR, which is the currency of our primary financial statements. Forward-looking statements The statements contained in this document that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: aim, believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, goal, should, would, is confident, will, and similar expressions as they relate to our company. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. We undertake no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties Such risks and uncertainties include but are not limited to the following: due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following: ƒ changes in general economic conditions, particularly in the United States, the Netherlands and the United Kingdom; ƒ changes in the performance of financial markets, including emerging markets, such as with regard to:

the frequency and severity of defaults by issuers in our fixed income investment portfolios; and

the effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities we hold; ƒ the frequency and severity of insured loss events; ƒ changes affecting mortality, morbidity, persistence and other factors that may impact the profitability of our insurance products; ƒ changes affecting interest rate levels and continuing low or rapidly changing interest rate levels; changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates; ƒ changes in the availability of and costs associated with liquidity sources such as bank and capital markets funding as well as conditions in the credit markets in general ƒ changes in the availability of, and costs associated with, liquidity sources such as bank and capital markets funding, as well as conditions in the credit markets in general ƒ increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets; ƒ changes in laws and regulations, particularly those affecting our operations, the products we sell, and the attractiveness of certain products to our consumers; ƒ regulatory changes relating to the insurance industry in the jurisdictions in which we operate; ƒ acts of God, acts of terrorism, acts of war and pandemics; ƒ changes in the policies of central banks and/or governments; ƒ lowering of one or more of our debt ratings issued by recognized rating organizations and the adverse impact such action may have on our ability to raise capital and on our liquidity and financial condition; ƒ lowering of one or more of insurer financial strength ratings of our insurance subsidiaries and the adverse impact such action may have on the premium writings, policy retention, profitability of its insurance subsidiaries and liquidity; th ff t f th E U i ’ S l II i t d th l ti i th j i di ti ff ti th it l i d t i t i ƒ the effect of the European Union’s Solvency II requirements and other regulations in other jurisdictions affecting the capital we are required to maintain; ƒ litigation or regulatory action that could require us to pay significant damages or change the way we do business; ƒ customer responsiveness to both new products and distribution channels; ƒ competitive, legal, regulatory, or tax changes that affect the distribution cost of or demand for our products; ƒ the impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including our ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions; ƒ

• ur failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving initiatives.

Further details of potential risks and uncertainties affecting the company are described in the company’s filings with Euronext Amsterdam and the US Securities and Exchange Commission, including the Annual Report on Form 20-F. These forward looking statements speak only as of the date of this document Except as required by any applicable law or regulation the company expressly disclaims any obligation or undertaking to release publicly any updates or These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, the company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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